Company Name: Boston Scientific Corp
Entry Price: $33.80
Target Price: $40.00
Projected Yield: 18%
Time Line: 3 to 6 months
About Boston Scientific Corp
Boston Scientific Corp is a US based company, which is one of the leading developers and manufacturers of medical supplies, surgical instruments, and other relevant products. The company's products are used by doctors in their daily medical practice.
What's the Idea?
Capitalize on a stock that may rise due to being underpriced, sales recovery, and new product approvals.
Buy Boston Scientific Corp >>
Why Trade Boston Scientific Corp?
Reason 1: Downtrend with Negative News: An Opportunity to Buy Low
Boston Scientific slumped in mid-November against the news that Lotus TAVR heart valve was not being released due to shipping issues. The company decided to immediately discontinue the product and all associated commercial, research and development, and manufacturing operations. The company did not want to spend additional time and funds on improving the delivery system.
Boston Scientific is expected file away inventories worth $225M to 300M, with the adjusted financial result decreasing by $100M to $150M in Q4 2020. As a result, the company's stock declined by 14.50%, which provides an excellent opportunity to buy low.
Reason 2: New Product Approvals and Gradual Sales Recovery
The coronavirus outbreak created a complicated environment for Boston Scientific, as many healthcare facilities had to switch to fighting COVID-19, with some non-urgent procedures and operations in other areas temporarily postponed.
The company reported the sales decline across the board, and its earnings in Q2 2020 dropped by 23%. However, this improved significantly in Q3, with the earnings declining by only 1.80% compared to the same period last year. Thus, the medical device market is gradually bouncing back, while any positive news on the vaccine may provide additional support. This is why Boston Scientific may soon post positive results again.
New product developments may provide some support as well. In 2020, the company got 23 approvals from various regulatory institutions for its products and tools, while 7 more are expected soon. With the general recovery in the medical market, new product launches may boost the company's sales in the midterm.
Reason 3: Plans to Reduce Debt Burden and Improve Balance Sheet
Over the last two years, Boston Scientific managed to get quite a few mergers and acquisitions, the largest being the acquisition of BTG International for $3.70B (with cash). As a result, the company's debt burden increased significantly, exceeding $10B, while the payment is expected to start in 2024.
Thus, the company needed to support its balance sheet. In Q2 2020, an additional package of shares worth $2B was issued to partially pay off the debt. Currently, Boston Scientific has $2B in cash, while its debt has dropped to $9.30B. Meanwhile, the debt to EBITDA ratio is at 3.7x, with the company's management planning to reduce it to 2.5x by the end of 2021.
Additionally, in early December, Boston Scientific announced the sale of BTG Specialty Pharmaceuticals for $800M. This amount will also help support the current balance.
As a result, it looks like the investors overvalued the existing Boston Scientific risks, which means the stock price may well get back to its pre-2020 level, in case no other negative news comes in.
How to Use the Idea
- Buy Boston Scientific Corp stock at $33.80.
- Allocate no more than 2% of your portfolio amount. To build a balanced portfolio, you can use recommendations by our analysts.
- Sell the stock when the price is at $40.00 per share.
How to Buy Boston Scientific Corp?
If you don't have an investment account yet, open it now: this can be done online, in just 10 minutes. All you need to do is fill out a short form and verify your account.
After opening an account, you can buy shares in either of the following ways:
Freedom24 Web Platform: In the Web Terminal section, type BSX.US (Boston Scientific Corp ticker in the NYSE) in the search box, and select Boston Scientific in the results. Open a secure session in the trading window on the right, select the number of shares you want to buy, and click Buy.
Freedom24 iPhone or Android App: Go to the Price screen and tab the search icon in the top right corner. In the search dialog that will show up, type BSX.US (Boston Scientific Corp ticker in the NYSE) and select Boston Scientific in the results. You will then see Boston Scientific Corp stock in the market watch; tap it and go to the Order tab in the dialog that shows up. Specify the number of shares you want to buy and click Buy.
Buy Boston Scientific Corp stock, don't miss the recovery against negative news!
Buy Boston Scientific Corp >>
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